Hall of Shame – Home Run Gone Wrong / No Auto Liability Coverage / No Insurance Coverage Quality Control
This scenario represents an actual coverage flaw in an insurance program of a well run, profitable business.
A mobile allied health firm in the business of retrieving blood and urine samples from patients at their homes reimbursed their nurses for the use of their personally owned vehicles throughout the business day. An unfortunate catastrophic accident occurred, involving a nurse rear-ending another vehicle while traveling from a patient’s home to the company’s headquarters. Of course, the attorney for the injured party pursued the “deep pockets” and ultimately the company’s auto policy settled for over $1,000,000.
The Good News / Home Run
The company was covered by their Auto policy and purchased an auto umbrella policy which was also triggered and made payment on the loss. Believe it or not, their “Global Insurance Broker” was able to deliver a renewal policy for a cost slightly below the prior year. This, on the surface, appeared to be a “Home Run.”
Below the Surface
KMRD’s coverage assessment identified the policy only provided coverage for “Symbol 2” which means liability coverage applied to “Company Owned Autos”. This meant the prior year’s claim would not have been covered and the company’s assets were clearly at risk. In other words, the competitively priced renewal provided no coverage for the company’s most prominent risk.
The Global Broker’s Response
KMRD’s identification of this error (and others) triggered a response from the “Global Broker” fixing the errors for little to no cost suggesting the policy was issued in error / the carrier failed to deliver the endorsement. The following year’s policy was renewed at twice the price.
The Problem-No Process for a Repeatable Result
The “Global Brokers” quick fix and apology was commendable but short term oriented. Unfortunately however there was no change in their process to eliminate a mistake like this from happening again.
Bigger = Better? Not if there is no process for insurance coverage quality control!
How KMRD Can Help:
KMRD delivers risk management and human capital solutions to over 600 clients nationwide. Our award-winning team, disciplined approach, proven processes, combined with our risk management portal make KMRD the leading choice to improve business protection and reduce the overall cost of risk.